~ 我看青山多妩媚，料青山见我应如是 The mountain looks so beautiful in my eyes, that it reminds me of myself

Channeling Your Inner Warren Buffett

It’s possible to invest like the Oracle, but not everyone can get his terms.

From his penchant for cheeseburgers and Cherry Coke to his belief in such iconic American brands such as Benjamin Moore & Co. and General Electric Co. (GE), Warren Buffett is our modern day investing Horatio Alger.

His is the Charles Atlas route to big financial muscles. Just follow Buffett’s tried and true path of value investing, we’re told, and chances are you’ll end up ridiculously rich. Even better: Unlike Warren, you don’t have to drive a Lincoln and live in a modest suburban home in Omaha, Neb.

Buffett contributes to the myth-making. In announcing his blockbuster $26.3 billion deal for Burlington Northern Santa Fe (BNI) on Tuesday, he called the costly acquisition an ‘all-in wager on the economic future of the United States. I love these bets,’ he said.

The problem with the image of Buffett as Everyman Investor is that too often the myth doesn’t match reality. Buffett and his investing company, Berkshire Hathaway Inc. (BRKA, BRKB), have had a mixed record on investments in recent years. His empire has been debunked in the last year by government bailouts and extraordinary terms he’s received on investments.

In other words, while there’s still merit in following Buffett’s value investing principles, even better are guaranteed returns that come from negotiating leverage.

First, the good: If you invested alongside St. Warren on Oct. 16, 2008, the day of his New York Times op-ed, ‘Buy American, I Am,’ you would be doing well.

The time was nearly perfect for a long-term bullish call. The financial crisis was in its worst throes and the federal Troubled Asset Relief Program was only 13 days old. Most of the bailout money had not reached the banks. Chrysler and General Motors were lurching toward bankruptcy.

Buffett cheered the markets. The Standard & Poor’s 500 Index closed a few points higher that day at 946.43.

We all know what followed. The index tumbled during the next five months, hitting a low of 676.53 on March 9, but it has edged back. The S&P 500 has spent most of the last three months above 1,000. As of this Monday, an investor taking Buffett’s advice on the day of his infamous article would have a 10% return not including dividends–enough to buy a Cherry Coke and cheeseburger lunch.

Likewise, if you followed Buffett into one of his biggest investments of 2008, Goldman Sachs Group Inc. (GS), you may be ready to upgrade to another of the Oracle’s weaknesses, Omaha steaks. Since Buffett announced his Goldman investment on Sept. 24 of last year, the stock is up more than 25%.

But like the morning after a junk-food meal, there is a price for indulging. Berkshire stock has yet to shake a year-long slump. After closing at $113,150 on Oct. 16, 2008, the day Buffett’s article appeared, the conglomerate has sputtered, going as low as $72,400 and then recovering to $101,530 as of Wednesday’s close, a loss of 10.2%. It’s also down 28% from its peak at near the end of 2007.

Meanwhile, shares of General Electric, which Buffett invested in on Oct. 1, 2008, are down 39%.

To his credit, Buffett has admitted his mistakes. In his famous annual letter to shareholders, issued in March, he wrote that ‘during 2008, I did some dumb things in investments.’

It’s a humble assessment, but there’s more to it than just some misplaced bets. He had the advantage that cash-rich investors do. Given desperate targets, he was able to win terms we, as average folks, couldn’t.

Simply put, Buffett didn’t play on the same investing field as you or I last year. He was almost guaranteed profits. He paid $5 billion for ‘perpetual’ preferred securities that pay him 10%, or $500 million, annually. He also received warrants to buy close to a 10% stake in Goldman at a discounted price.

The GE deal was almost as good. Buffett bought similar perpetual preferreds that pay 10%, or $300 million. His GE warrants, priced at $22.25, are under water, with the stock at $14.19 as of Wednesday’s close, but Berkshire doesn’t have to exercise the option.

Buffett also suffers from what I like to call Jamie Dimon disease, a malady I’ve assigned to the JPMorgan Chase & Co. (JPM) chief executive. Dimon argued that his bank didn’t deserve to be under the same scrutiny as other bailed-out banks in part because JPMorgan repaid its bailout funds and didn’t need them in the first place.

Like Dimon, Buffett likes everyone to believe the massive government intervention into the financial markets didn’t benefit his company directly. But Berkshire Hathaway is a major insurance company that owns such well known financial subsidiaries as Geico, General Re and a homebuilder, Clayton Homes, that have received indirect benefit from government programs.

I bring this up because Buffett was named to President Obama’s economic team in July 2008, a job that even in the midst of a campaign gave him not only access to economic policy but the power to shape it. As he made his investments during roughly the last year, he wasn’t just close to powerful people in Washington, he was one.

How many of us had that advantage?

None of his less-than-legendary moves is likely to sully the mythical Warren. One business publication calls him ‘America’s billionaire next door.’ That’s true. The help has always lived close to masters such as Buffett.